Thanks for the insight knighty. This board is awesome, you page someone and they show up!
Would an issue with flexing be less likely to show up on the dyno compared to the cylinder lining issue, since the flexing should at least in part be a product of the actual mounting in the chassis? I'm trying to figure out why the engine, which should have been the bit they got on top of first, is causing so much struggle. I would have thought that the liner issue would have shown up on the dyno ages ago.
The other thing that gets me is that if they knew they had this issue and planned upgrades, why did they bring 2 cars to test day knowing they had a fatal flaw? I would have thought time and money would be best spent at home.
I agree with gwyllion that without a functional engine we and probably they have no idea what sort of mechanical or aerodynamic potential the car holds.